Obama at the Pinnacle

Above all he needs faster growth for a successful second term.

Updated Jan. 21, 2013 12:01 a.m. ET

President Obama takes his second oath of office this weekend at his highest point in the polls in two years. He is clearly feeling and showing his political dominance, while his opposition is divided and unpopular. The question—to turn Rahm Emanuel on his head—is whether he will let this lack of a crisis go to waste.

Four years ago, Mr. Obama inherited a sinking economy and he used that crisis and his Democratic supermajority to ram through the most liberal program in 40 years. The price was a polarized electorate, the loss of the House in 2010, and the slowest economic recovery in decades. Yet he was able to win re-election against a weak GOP candidate (who emerged from an even weaker GOP field) by again blaming the economy on his predecessor.

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Today he faces no immediate crisis, which gives him a different opportunity. He has a chance to use divided government to put the economy on firmer footing while achieving rare bipartisan victories on longer-term problems such as debt, entitlements, immigration and education choice.

ENLARGE

With ObamaCare secure for at least four years, he could focus on reforming a government that too few Americans trust, on growing the economy faster than 2%, and on raising the middle-class incomes that have declined throughout his Presidency. This is the audacity of our own hope.

But to court understatement, this does not seem to be Mr. Obama's plan. Since his victory he has shown even less inclination to compromise, and his rhetoric against his opponents has become even harsher. Consider this broadside from his gun-control remarks this week:

"There will be pundits and politicians and special interest lobbyists publicly warning of a tyrannical, all-out assault on liberty, not because that's true but because they want to gin up fear or higher ratings or revenue for themselves. And behind the scenes, they'll do everything they can to block any common-sense reform and make sure nothing changes whatsoever."

So anyone who disagrees with him isn't merely wrong but is morally corrupt and on the take. This tone increasingly defines his Presidency.

This is thrilling to his supporters on the left, who long for a Liberal Lancelot to destroy the barbarian Republicans. And perhaps that is the role that Mr. Obama wants to play. Certainly his appointments and priorities since November suggest a political strategy intended to demonize Republicans with the main goal of restoring Nancy Pelosi as Speaker of the House.

ENLARGE

President Obama during the 2009 inauguration
AFP/Getty Images

The liberal writer Ron Brownstein explained this posture this week as a function of Mr. Obama's new and ascendant political coalition. Bill Clinton had to worry about losing conservative voters, especially whites in swing states. Mr. Obama built his re-election majority with minorities, young people, single women and affluent whites and college-education women who are culturally liberal. He can thus govern more aggressively from the left—and Mr. Brownstein predicts he will—because he has more coherent and durable support.

This may explain Mr. Obama's behavior, but it also comes with significant risks. For one thing, he is further polarizing the electorate in a way that will make it even harder for him to get Republican votes on immigration and guns. Maybe this will re-elect Ms. Pelosi in 2014, but instead it could jeopardize Democrats running in states carried by Mitt Romney. Mr. Obama's coalition doesn't dominate Alaska, Arkansas or Montana beyond Bozeman.

The bigger risk is economic. Mr. Obama has managed to skirt responsibility for anemic growth by claiming that it is the fault of George W. Bush and everyone before that. His solution is always more public spending without end. The political statute of limitations on this excuse will eventually run out.

But more substantively, what about the middle-class he claims to champion? In December, the number of unemployed was 12.2 million and the jobless rate was 7.8%, still higher than when he took office. The youth jobless rate was nearly 11%, while for blacks it was 14% and for Hispanics 9.6%.

Above all else, Mr. Obama needs faster economic growth. He needs 3%-4% growth to raise incomes and to provide the revenue to meet all the spending commitments of his first term. Continued growth of 2% will mean his legacy will be the largest number of jobless Americans for the longest period of time since the Great Depression.

The best way to abet such growth is to follow the Clinton path of working with Republicans to reduce spending and regulation and reform the tax code and entitlements. The alternative is at least two, and perhaps four, more years of bloody budget and debt-ceiling fights. The Federal Reserve may be able to keep the recovery afloat on a sea of money, but Mr. Obama shouldn't want to gamble his Presidency on it.

Such a bipartisan reform path also makes sense for Mr. Obama's own liberal priorities in the long run. As the nearby results of an election exit-poll question show, Americans who voted in 2012 are more skeptical of government than they were in 2008 or 2004. Four more years of federal dysfunction will only feed this cynicism. It will also make it harder to solve the coming entitlement spending wave that will narrow the policy options for other liberal priorities. With ObamaCare coming online, entitlements could swallow the fisc within a decade.

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Second terms are often tormented by foreign crises, and that could also apply to Mr. Obama. He has assured the voters that he is ending foreign entanglements, but this retrenchment is also storing up trouble. The al Qaeda resurgence in North Africa shows that terrorism remains a threat (see nearby), while Iran sprints toward a bomb, and China asserts itself against our allies in the Western Pacific.

The history of the last century is that U.S. retreat and willy-nilly defense drawdowns invite foreign adventurism. So they will again, with the question being whether the world erupts in the next four years or awaits the next President.

Mr. Obama enters his second term still personally popular, and he has the media and Hollywood at his back. But the great Presidents do more than tactically outmaneuver their opposition in this or that budget deal. They enhance America's national stature, improve its material well-being, and address the problems that only Presidents can address. If Mr. Obama wastes his non-crisis years, he could find that it is a steep fall from the pinnacle.

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